Web Host Faces Potential Contributory Trademark Liability–Louis Vuitton v. Akanoc

By Eric Goldman

Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., C 07-03952 JW (N.D. Cal. Dec. 23, 2008)

This is one of countless anti-counterfeiting actions by luxury brands against allegedly infringing websites—but the twist is that the brand owner is going after the sites’ web host. In Tiffany v. eBay, the big brand got very little traction against eBay based on eBay hosting auctions for allegedly infringing goods. This case doesn’t turn out as well for the web host. The court, without citing Tiffany, leaves open the possibility that the web host could be liable for its customers’ infringing activities. Why the difference?

Contributory Copyright Infringement

The court starts with contributory copyright infringement. The court doesn’t clearly specify the direct copyright infringement taking place. It discusses evidence that the defendant’s customers are selling counterfeit goods, but it doesn’t connect the dots to show that the counterfeit goods are actually protected by copyright law. (It’s not automatic that counterfeit goods infringe copyright).

Also, the DMCA online safe harbors are not mentioned, which makes sense if the copyright-infringing behavior is the actual sale of the counterfeit goods instead of publishing information about those goods. However, as we saw in the Tiffany case, the web host cannot determine if the goods being sold are actually counterfeit. Nevertheless, the court says a jury could find the web host had actual knowledge of the infringement due to a series of defendant emails and demands from the plaintiff. From my review, it appeared that the referenced emails involve the web host relaying the plaintiff’s takedown notices to the hosted customers, so I’m not sure how these emails could evidence knowledge of the counterfeiting.

With respect to material contribution, the court references the confusing language from Perfect 10 v. Amazon and the archaic Napster precedent to say that failure to take simple measures to stop infringement can qualify as a material contribution (a standard referenced in Amazon), and the web host here could easily disable the IP address of the putatively infringing website. As a result, its failure to take such simple steps could constitute material contribution.

All told, the contributory copyright infringement analysis in this case is heavily plaintiff-favorable. It appears that the plaintiff’s prima facie showing is (1) allegedly counterfeit goods being sold outside the host’s purview (the direct infringement), (2) demand letters plus emails from the host to customers relaying takedown notices (knowledge), and (3) the host’s ability to turn off accounts or disable IP addresses (material contribution). This is a disconcerting standard, because just about every web host could satisfy this test.

Contributory Trademark Infringement

The court references the contributory trademark infringement standard from the Ninth Circuit’s 1999 Lockheed v. Network Solutions case, requiring knowledge of the infringement plus “[d]irect control and monitoring of the instrumentality used by the third party to infringe the plaintiff’s mark.” In practice, it appears the court equates the contributory trademark and contributory copyright analysis. The court does so expressly for the knowledge prong, where the judge simply references its prior copyright discussion.

As for the host’s control, the court analogizes the host to an offline swap meet (just like Tiffany did), shoots down some of the defendant’s arguments and then says that, per Fonovisa, the defendant cannot remain willfully blind to infringement on its servers. This sounds a lot more like a contributory copyright infringement analysis than the Lockheed “direct control and monitoring” requirement.

I was disappointed that the court (like so many others) does not address the web host’s eligibility for the printer/publisher defense. This might very well be apropos to web hosts.

Other Claims

The court dismisses the vicarious copyright infringement claim because there was no evidence that the web host’s profits varied with the infringing activity. The court also dismisses the vicarious trademark infringement because the web host lacked the requisite agency relationship with its customers (why do apparently smart IP lawyers routinely allege vicarious trademark infringement when there is no agency???).

Implications

I think the contributory trademark infringement ruling is entirely consistent with the obvious hole left open by the Lockheed case, which excused a domain name registrar for selling allegedly infringing domain names but implied that web hosts might be treated differently. More surprising, perhaps, is that in the decade since the Lockheed case, we’ve had almost no cases mapping out the boundaries of web host liability for contributory trademark infringement. It’s remained one of those known Cyberlaw frontiers. While it’s nice to get a case addressing that frontier, I wish it were more favorable to web hosts.

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